Ford will invest some 600m Brazilian reals (USD358m) in its Brazilian Taubate plant to start output of next generation engines and expand engine production capacity to 500,000 units a year, the company said in a press release.

Dow Jones reported that the new generation engines, called Sigma, will be used mainly in locally produced vehicles, but they will also be exported.

"The investment will improve productivity, bring in state-of-the-art motor engineering and will contribute to a considerable increase in our competitiveness within and outside Brazil," said Marcos de Oliveira, chief executive of Ford in Brazil and in the Mercosur region.

The Taubate plant, situated in Sao Paulo state, has produced over 4.3 million engines since it was opened in 1987.